Recent Divine Discussions

Sunday, July 6, 2008

Letting Go and Letting God - My plan to financial freedom

Well not 100% financially free but close to it.

Read my last post, The Job Offer??? If you haven't then do so now if you want to understand the following madness that is about to ensue.

Here we go:

I officially received a job offer on Thursday which I have accepted. My start date is the 21st (I wanted to give my current employer the standard two weeks). Here is the catch: The company whom I will be working for is the same company who's contract ends on Doom's Day.

Crazy huh?!

Yeah I know but I have my reasons for taking such a risk. My position with my current employer is foggy after Doom's Day . There is a big chance that I would be laid off due to lack of work, especially since I primarily worked the NASA contract. My position with the new company after Doom's Day is also foggy, but not as much. There is a high probability that the department will get picked up onto the new contract. Very high probability. And on top of that, I am making $25K more than I would sticking it out with my current employer.

Here is my plan:

I have accrued 15 paid-time-off-days (PTODs) which equates to 3 weeks of pay. I get to cash those in once I leave the company. This will be included with my last check. I plan on putting 2 weeks worth into my savings account bringing the total to about $5200. The remaining 1 week will be used to help out during the lapse between my last paycheck and the first one with the new company.

My 401K account total should be around $13100 by the time I terminate. I have the option to roll it over into another 401K account, keep it where it is, roll it over into an IRA account, or cash it out. I am going to cash it out. Yeah I said it. You'll understand why by the end of my post. I will be hit with a 20% tax, leaving me with about $10,500 (Yes I know I will be hit with another 10% during tax time. I will deal with it). I am going to put ALL of that into my emergency fund. That brings my total to about $15700.

Based on my calculations, over the remaining time left on the contract I will be able to save at least $6000. This is of course based on my new monthly income and my current monthly expenses. I do not plan on increasing the latter any time soon. I actually hope to bring it down some.

Anyways, adding the $6000 to my emergency fund brings it's total to $21,700 by Doom's Day. This is more than enough to sustain my daughter and I if for any reason I am left job-less after September 30.

The "Climax" of my plan:

If Doom's Day comes and I have that job security, then I will take $20,000 of the money in my emergency fund and pay off all of my credit card debt and my personal loan. With my new salary I will be able to build my emergency fund fairly quickly. But I will deal with that once I get there. I gotta get over this hurdle first.

In the meanwhile, I will start sending out my resume and applying for the numerous positions that will be opening up due to the new contract. I am extremely confident that I will have a job lined up by the time 9/30 comes. I have numerous contacts and a lot of people who love and appreciate the work I have done and are confident in my abilities.

This may seem like a huge risk to take, but desperate times call for desperate measures. I have always stuck with the safe zone, sometimes regretting not taking that risk. Especially when that step can be taken out on faith. I am a whole-hearted believer in God and the things that he does for us. I believe that there is a reason this opportunity was set before me. And I know he has my back the whole way through.

I have been contemplating leaving my current employer for a while now. With such a small company there isn't much room for advancement and not much salary wise either. I knew I had to leave but I was so comfortable where I was. So I needed a little shove in the right direction and I believe this is it. I can only go up from here.

All that I want to do, all my goals, they are in arms reach now. If everything goes as planned, then once I pay off my cc debt there will be a dominoes effect. I My cc debt and personal loan will be gone. My
credit score will increase. This will also free up around $700 a month allowing me to save even more money. I could have my home by next year. I don't want to get ahead of myself but it is a possibility.

Hope you guys had a great weekend.


DayDreamer79 said...

Girl, your stuff is in order! Let go and Let God is right!

velvet jones said...

All anyone can ask is that you make yourself aware of the risks, which you have. I'm a little nervous about the 401k sitch, but you know your business best. Plus you seem very savvy at being flexible dealing with things as they come along. I'm confident if something unplanned happens you'll make the best decision you can. I hope everything works out for you in the end. :-D

Lilo said...

WOW You work for NASA! You must be very smart. Can you tell me what kind of work do you do? It sounds very interesting to me. Good luck with everything.

K. said...

I don't think that cashing out your 401k is a good idea. After the 10% penalty won't it also be taxed as income to the tune of at least 28%? You'll end up with only 60-70% of that 13k. Why not focus on building up your efund with your new pay increase?

Sistah Ant said...

I am happy that you are looking at a new job with new pay! I am also worried about you cashing out the 401K... can't you wait until 9/30 to make your decision on whether or not to cash it out? My gut is telling me that the lost momentum on the 401K will be more devastating to your long term retirement savings prospects... The fact that you anticipated that readers would worry about it tells me you know it's a gamble that maybe you shouldn't take...